Update on US-Canada Tariffs
Trump Announces Global Reciprocal Tariff Plan, Potentially Benefiting Canada Amidst Trade War Expansion
President Donald Trump has declared that on April 2nd, the United States will implement reciprocal tariffs on all trade partners as a countermeasure to existing tariffs and other trade barriers. Dubbed “Liberation Day” by Trump, he claims this marks the beginning of financial gains for the US. The sudden imposition of tariffs in January on its closest allies had taken Canada and other nations by surprise. Additionally, Canada’s Prime Minister has announced early elections next month, citing the threat posed by Trump’s tariffs.
According to Avery Shenfeld, Chief Economist at CIBC Capital Markets, although these widespread tariff measures might initially unsettle markets, they could inadvertently benefit Canada. Shenfeld explains that as multiple countries are affected similarly, it may increase the likelihood of joint negotiations to lower tariff barriers, potentially positioning Canada more favorably in global trade. Particularly in industries dominated by foreign suppliers, such as fisheries, base metal manufacturing, and mining, Canada might gain market shares due to retaliatory measures from other nations against the US.
Moreover, if Europe and Asia respond to the new US tariffs by imposing their own or boycotting American exports, it could lead to inflationary pressures for US consumers and compel American businesses to lobby the White House for a resolution to the trade disputes. Under such multilateral trade pressures, the Trump administration might retain some tariffs after negotiations to fulfill political promises, while providing leeway for countries like Canada to evade US protectionist policies.
Local Focus in Canada
Hudson’s Bay Initiates Major Store Liquidation, Thousands of Jobs at Risk
Hudson’s Bay Company has received court approval to commence the liquidation of 90 out of its 96 stores starting Monday, in an effort to repay millions in debt owed to creditors. The six stores not slated for liquidation are located in key areas including downtown Toronto, Yorkdale Shopping Centre, Hillcrest Mall in Richmond Hill, Ontario, and three locations in the Greater Montreal Area. This move could potentially affect approximately 9,360 employees.
The company had attempted to avoid a total shutdown by seeking additional funding but announced on March 14 that it had failed to secure the necessary capital, thereby necessitating the liquidation. Despite Hudson’s Bay exceeding sales expectations in the past week, the company has stated that it no longer requires the loan previously taken to facilitate the liquidation sale. Moreover, Hudson’s Bay will continue to pay approximately CAD 7 million monthly to its joint venture partner, RioCan Real Estate Investment Trust, one of Canada’s largest REITs.
Pre-Market Overview for This Week
Canadian Stock Market
The Canadian stock market faced a downturn on Friday, with the S&P/TSX Composite Index falling by 92 points, a 0.4% drop, to close at 24,968 points. Despite the day’s losses, the index still managed to record its best weekly performance since November 2024, posting a gain of 1.7%. The market’s focus was on the progress of US-Canada trade negotiations, while also being influenced by falling metal prices and mixed retail sales data.
Although the technology and healthcare sectors continued to attract buyers, declines in mining, industrials, and consumer cyclical sectors offset these gains and weighed down the overall index performance. The most actively traded stocks included G Mining Ventures, Canadian Natural Resources, Canadian Imperial Bank of Commerce, Telus, and Manulife Financial.
U.S. Stock Market
Despite ongoing uncertainties surrounding tariff policies and the direction of the Federal Reserve’s monetary policy, U.S. stocks managed a modest rise last Friday, with the S&P 500 and the Dow Jones Industrial Average increasing by 0.5% and 1.2% respectively. These gains helped erase some of the losses from previous sessions, breaking a four-week downward trend.
In recent weeks, the market has been under pressure due to the evolving timeline and scale of tariff impositions, which have clouded the outlook for corporate profits and the Federal Reserve’s monetary strategy. However, signs of a rebound emerged last week, with the S&P 500 rising over 1% on Wednesday following the announcement of the Fed’s latest policy decision. The Federal Reserve has decided to keep interest rates steady, with indications that there may be two rate cuts later this year.
Currency Markets
Last Friday, the U.S. dollar edged higher against the euro, marking its first weekly gain for the month. Investors liquidated their recent gains in the euro ahead of impending U.S. reciprocal tariffs, leading to a weekly decline of 0.6% for the euro, which closed at 1.08223 USD, its first weekly drop since February 28th.
Despite the German Upper House passing reforms on borrowing rules and approving a 500 billion euro fund for infrastructure revitalization, the euro weakened primarily due to profit-taking. The Federal Reserve’s indication of no immediate interest rate cuts provided temporary relief for the U.S. dollar.
Meanwhile, the dollar rose 0.3% against the Japanese yen to 149.21, and the British pound fell 0.3% to 1.293 USD. These currency movements reflect a global central bank tendency to maintain stable interest rates following assessments of U.S. trade policy impacts.
Gold and Oil Prices
Gold prices fell by 1% last Friday amid a strengthening U.S. dollar and profit-taking, although ongoing geopolitical and economic uncertainties, coupled with expectations of Fed rate cuts, supported gold’s third consecutive weekly rise.
Oil prices closed higher last Friday and are poised for a second consecutive weekly gain. Recent U.S. sanctions against Iran and a new production plan announced by the OPEC+ alliance have bolstered market expectations for tightened supply.
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Upcoming This Week
Monday, March 24
U.S. and Russian officials to hold talks on Ukraine in Riyadh, Saudi Arabia.
Eurozone Manufacturing/Services/Composite PMI for March (Preliminary).
U.S. S&P Global Manufacturing/Services/Composite PMI for March (Preliminary).
Tuesday, March 25
U.S. FHFA Home Price Index for January (Monthly).
New York Fed President John Williams to deliver opening remarks at an event.
U.S. New Home Sales for February (Annualized).
U.S. Conference Board Consumer Confidence Index for March.
U.S. Richmond Fed Manufacturing Index for March.
Wednesday, March 26
UK CPI for February (Monthly).
UK Chancellor of the Exchequer Rishi Sunak to deliver the Spring Budget Statement.
U.S. Durable Goods Orders for February (Monthly).
U.S. EIA Crude Oil Inventories for the week ending March 21.
Thursday, March 27
St. Louis Fed President James Bullard to speak.
U.S. Initial Jobless Claims for the week ending March 22.
U.S. Real GDP Annualized Quarterly Rate (Final) for Q4 2024.
U.S. Pending Home Sales Index for February (Monthly).
Friday, March 28
Bank of Japan to release the summary of opinions from its March monetary policy meeting.
UK GDP Annual Rate (Final) for Q4.
Germany’s Adjusted Unemployment for March.
Eurozone Industrial Sentiment for March.
Canada’s GDP for January (Monthly).
U.S. Core PCE Price Index for February (Annual Rate).
U.S. University of Michigan Consumer Sentiment Index (Final) / One-Year Inflation Expectations (Final) for March.
Saturday, March 29
Atlanta Fed President Raphael Bostic to speak.
This week, the financial markets are anticipating a series of notable earnings reports from a diverse set of companies. Among the most awaited are Oklo (#OKLO), GameStop (#GME), Intuitive Machines (#LUNR), Dollar Tree (#DLTR), lululemon athletica (#LULU), KULR Technology (#KULR), Chewy (#CHWY), MicroVision (#MVIS), Bitfarms (#BITF), and Canadian Solar (#CSIQ).
Published by Vikki Zhao
March 34, 2025 11:00 AM EST. 10 min read
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